Coal-fired power is dying, not only across the nation, but across New England as well. The region’s coal-fired power plant fleet has started to succumb to the costs of operating a coal-fired dinosaur in the age of energy efficiency, growing renewable electricity generation, and–for now–low natural gas prices.
Predominantly coal-fired Brayton Point Station in Somerset, Massachusetts, is the state’s largest single source of carbon emissions (producing over 6 million tons in 2010). Another harmful pollutant emitted by Brayton Point is particulate matter, which is measured daily by monitors that continuously check the opacity of the soot coming out of the plant’s smokestack. Brayton has been violating their limits for emitting that soot, and failing to monitor their emissions of several other harmful pollutants. Yesterday, CLF filed a notice of intent to sue Brayton’s current owners, Dominion Resources, for those violations. CLF’s upcoming lawsuit is just the latest in a growing list of bad news for Dominion and Brayton Point.
As New England’s other coal plants started to close or teeter on the edge of closure, Brayton Point Station was expected to be the last coal plant standing in the region. It is New England’s largest coal-fired power plant, and in the past decade its current owners, Dominion Resources, sank over $1 billion in pollution control upgrades into the behemoth. While Brayton Point does not have the kind of legal protection from market realities that PSNH exploits to prop up its dirty old coal generation in New Hampshire, many had assumed that Brayton Point was well-positioned to survive in the changing power generation landscape.
source: EPA and ISO-NE data
But the relentless pressure of low natural gas prices and the costs of starting up and operating an enormous coal-fired power plant have begun to affect every corner of the coal generation market in New England, and Brayton Point has not been spared. The plant’s “capacity factor,” which reflects the amount of power the plant generated compared to the amount of power it could have generated if used to its full potential, has taken a nosedive over the past three years. A plummeting capacity factor means that it is a better economic choice for a plant’s owners to keep it idle most of the time than to operate.
Dominion Resources, clearly, has seen the writing on the wall for coal in New England. After signing a binding agreement to cease coal operations at Salem Harbor Station as a result of CLF’s lawsuit against that plant, Dominion sold the Salem plant earlier this year. Following closely on the heels of the Salem sale, the company put Brayton Point on the market in September. While Dominion is marketing Brayton as a modern coal-fired power plant due to its recent billion-dollar pollution control investments, UBS recently assessed [PDF] the value of those investments (and the plant itself) at zero.
Brayton Point’s plummeting capacity factor and bleak sale prospects reflect both the current power of low natural gas prices and the weakness of these old, out-dated coal plants. That trend will continue as the New England energy market continues to move forward with better integration of efficiency, conservation and renewable generation. Dark clouds are rising over Brayton Point. In the meantime, CLF and our partners will work diligently to hold the Brayton Point power plant accountable for producing its own dark clouds of pollution in violation of the law.
Protest at Salem Harbor Power Plant. Courtesy of Robert Visser / Greenpeace.
This week the Conservation Law Foundation (CLF) and HealthLink secured an Order from the US District Court in Massachusetts requiring Salem Harbor power plant owner Dominion to shut down all four units at the 60-year-old coal-fired power plant by 2014. In bringing a clear end to the prolonged decline of Salem Harbor Station, this settlement ushers in a new era of clean air, clean water and clean energy for the community of Salem, MA, and for New England as a whole.
The court’s order is based on a settlement with Dominion to avoid CLF’s 2010 lawsuit alleging violations of the Clean Air Act from going to trial. The terms of the settlement, which can be found here, ensure that:
Units 1 and 2 at the plant must retire (indeed are retired) by December 31, 2011; Unit 3 by June 2014;
Dominion may not repower the retired coal-burning units, even if a buyer for the power was to come forward;
Neither Dominion, nor any successor, may use coal as fuel for generating electricity on that site in the future;
Dominion must fund projects of at least $275,000 to reduce air pollution in Salem and surrounding municipalities that have been impacted by the plant’s emissions.
The settlement, and the legal actions which led to it, provide a template to force plant shutdowns as changing market conditions, public health concerns and cleaner energy alternatives push the nation’s fleet of old, polluting dinosaurs to the brink. What makes this outcome unique is that, as part of its advocacy strategy, CLF filed a successful protest at the Federal Energy Regulatory Commission in Washington DC which effectively prevented Dominion from collecting above market costs for operating this aging and inefficient power plant. This first-ever ruling by FERC is in stark contrast to coal power plant retirements in other areas of the country which were brought about by agreements to pay (i.e., compensate) plant owners for shutting down their plants. In the case of Salem Harbor Station, retirement resulted from legal action to deny the plant’s owner compensation and cost-recovery by ratepayers.
A little background: Most of the nation’s coal-burning fleet, were designed, constructed and began operation in the 1950’s and 60’s. More than 60% of them have been operating for 40 years or more, meaning that they are now beyond their useful design lives. This is the case for all of New England’s remaining plants, which generally were built more than 50 years ago. In addition to the excess pollution and inordinate adverse impact these plants impose to public health and the environment, they are finding it difficult to compete with newer, cleaner and more efficient power producing technology. In the market, the day of reckoning has arrived. New England’s coal-fired power plants are losing their shirts. They are rarely asked to run by ISO-New England, the operator of our regional electricity system, because their power is more costly (i.e., out-of-market) than the region’s cleaner and more efficient power generating fleet.
So why don’t they all retire? Unfortunately, there are several factors that can, in many instances, complicate matters. For Salem Harbor Station: system reliability (i.e., keeping the lights on). Because these plants were built so long ago, and unfortunately in close proximity to population centers where demand for power is greatest, the system was designed assuming that electricity is being generated at these locations. Thus, removing electricity generation from these sites can create reliability risks at times of peak electricity consumption. This was the case for Salem Harbor. Try as we might (including NStar’s recent $400 million transmission upgrade in the North Shore), when ISO-NE modeled worst case conditions, it still found that Salem Harbor was needed for reliability and consequently required ratepayers to pay to maintain Salem Harbor, even though its power was far more expensive to produce than more modern plants. To break this logjam, CLF filed a protest at FERC claiming that ratepayers were getting bilked (in legalese: paying rates that were unjust and unreasonable) and that a small investment to develop a reliability alternative for the plant would save the ratepayers money and would safeguard public health.
FERC agreed — at least with the money part (as FERC is a financial, not environmental regulatory agency). Its December 2010 order granting CLF’s protest compelled ISO-NE and the region’s electricity market participants to expedite the process for developing reliability alternatives for Salem Harbor’s expensive power (in utility parlance, to replace its “reliability function”). Shortly thereafter, ISO-NE crafted a new plan that will keep the lights on at reasonable cost to customers, while also creating a more flexible, reliable grid.
The new plan calls for simple and relatively inexpensive electric transmission line upgrades that will meet the area’s reliability needs without Salem Harbor Station and allow for the deployment of newer and cleaner energy resources like energy efficiency, conservation and renewables such as wind and solar. As soon as the plan was approved in May of 2011, the die was cast and Salem Harbor’s retirement became imminent. To its credit, the very next day Dominion announced that the plant would be shut down. As we all know, corporation’s make decisions based primarily on economics; once FERC denied them the above-market rates they had been collecting for years to maintain the plant, Dominion was compelled to retire the plant. Couple that with the prospect of major expenditures for pollution upgrades that would result from CLF and Healthlink’s lawsuit, there was only one rational outcome. Good-bye Salem Harbor station. Next up (or should I say, down): Mt. Tom, Brayton Point, both of which are uneconomic and facing the end of the road.
As I said in a joint press statement with Healthlink (found here), “This outcome sends a signal to coal plant operators everywhere that they cannot avoid costs through noncompliance with the Clean Air Act. These obsolete plants that either have decided not to invest in technology upgrades or are retrofitting at ratepayers’ expense are doomed: they are staring down the barrel of cheaper and cleaner alternatives to their dirty power and public and regulatory pressure to safeguard human health. When these plants can no longer get away with breaking the law as a way to stave off economic collapse, I predict we will see a wave of shutdowns across the country.”
The history of Salem Harbor Station is both long and tortured (recall then-Governor Romney standing at the gates of the plant in 2003 and saying that the plant was killing people). Despite its bleak financials and unjustifiable damage to public health and the environment, Salem Harbor Station continued to operate and pollute for a decade or more beyond when it should have succumbed to age and obsolescence.
Shanna Cleveland, staff attorney at CLF said, “The Court’s Order coupled with our successful FERC protest have finally put an end to a half century of toxic and lethal air pollution from Salem Harbor Station. The very factors that have been propping the power plant up for years beyond its useful life – cheap coal, lax environmental oversight, and overdue reliability planning – have been pulled out from under it.”
Today marks the beginning of the end of coal’s dirty energy legacy in New England, as Dominion of Virginia, owner of Salem Harbor Station power plant in Salem, MA confirmed that it will shut down the facility by 2014. Dominion also said that it would shut down two of the 60-year-old plant’s smaller coal units this year.
The announcement ushers in a new era of clean air, clean water and clean energy for the community of Salem, MA, and of New England as a whole. The announcement is monumental not just for the people of Salem who can now see the end of their long struggle for cleaner air, but for New England as a whole. At last, technology has caught up with these polluting vestiges of the past, making them uneconomic and impractical to run.
Salem was one of the plants targeted by CLF’s Coal-free New England campaign, which aims to shut down the region’s remaining coal-fired power plants and make way for a clean energy future. Earlier this year, CLF was instrumental in the closure of Somerset Station power plant in Somerset, MA. More >
The Federal Energy Regulatory Commission (known as “FERC”) has delivered a clear message: the time to plan for a future without coal is now. This comes in response to a protest submitted in October by CLF that challenged a decision by the New England Independent System Operator (ISO-NE) that could have kept the 60 year old Salem Harbor Station running for years longer, despite the damage it causes to public health and the environment and the huge costs it imposes on ratepayers.
CLF argued that ISO-NE, the overseers of the regional electricity system under FERC’s supervision, should have developed an alternative to retaining units at Salem Harbor Station to meet the area’s reliability need. CLF therefore asked FERC to step in to expedite the planning process. Today, the FERC issued a decision directing ISO-NE to find a solution that would allow shutdown of the Salem Harbor power plant – a dirty, obsolete and unprofitable plant that has long outlived its lifespan and has requested to leave the market.
“We…order ISO-NE to submit a compliance filing within 60 days that either identifies alternatives to resolve the reliability need for Salem Harbor Units 3 and 4 and the time to implement those solutions, or includes an expedited timeline for identifying and implementing alternatives.”
The news that FERC is mandating action to ensure that this dirty coal plant can retire without impacting reliability is a game changing development of national significance. The Chicken Little warning that old coal is needed to keep the lights on—brandished by coal interests primarily to delay long overdue emissions reductions requirements—simply isn’t true. Today FERC concurred that the sky will not fall – the lights will not go out without old coal – if we envision a future without it and plan for that future. That future starts here in New England with a concrete plan and timeline for life without Salem Harbor Station.
Students from the Environmental Law Clinic at Columbia Law School provided excellent research in support of CLF’s filing.
In the wake of Dominion’s announcement that it would not be cost effective to continue to operate and invest additional capital for pollution controls at Salem Harbor Station, the Patrick Administration has sent a message to ISO-NE calling for action. In a letter to the President of ISO-NE, Secretary of Energy and Environmental Affairs, Ian Bowles, highlighted the need to invest in clean energy instead of propping up old, environmentally obsolete coal plants such as Salem Harbor Station. Secretary Bowles urged ISO-NE to “quickly implement” a solution to allow Salem Harbor Station to retire.
Clean energy policy has been one of the centerpieces of the Patrick Administration, and this letter signals not only the Administration’s commitment to building clean, new energy infrastructure, but also the important role they have in hastening the retirement of the coal-fired power plants that cause significant damage to public health and the environment.
ISO-NE is responsible for finding an alternative that will remove any need for Salem Harbor Station; however, after 7 years of transmission upgrades and planning, ISO-NE rejected Dominion’s request to remove Salem Harbor Station from the market over concerns that the plant could be needed on the hottest days of the year. CLF has been pushing ISO-NE to expedite its planning process so that ratepayers will not be forced to bear the costs of keeping this 60 year old coal and oil plant on line despite its continued struggles to meet environmental regulations.
The Secretary’s letter is particularly timely given that ISO-NE will host meetings on December 15 and December 16 to discuss the planning process for replacing Salem Harbor Station.
It may come as no surprise that Dominion Energy ‘s spokespeople don’t want to admit that Dominion’s recent moves to “delist” Salem Harbor Station are signs that Dominion plans to shut the plant down (read recent statements here and here). Dominion has been spinning stories about the plant to local audiences for years. But apparently, Dominion CFO Mark McGettrick has no such trouble. At a financial conference at the Edison Electric Institute on November 2, McGettrick confirmed that the plant will shut down within five years. “We have announced that two of our coal plants will shut down in the future when the environmental rules are clear. The first is Salem Harbor in the Northeast. We’ve already tried to delist a few of those units, but the ISO has required the two biggest ones for reliability. But in the near future, certainly within this five year horizon, we would expect Salem Harbor plant to shut down. We will not be investing any capital for environmental improvements at Salem Harbor.”* No mincing words for McGettrick.
So there you have it. Salem Harbor is going to shut down within five years. Dominion says it will not invest any more money in environmental improvements at the plant. So, if ISO-NE continues to find the plant is needed for reliability, who will pay the price for those improvements? Ratepayers. Specifically, the ratepayers who live in the shadow of this plant in northeastern Massachusetts. That’s why ISO-NE must act now to find an alternative to Salem Harbor Station. CLF has stepped in to ask the Federal Energy Regulatory Commission to order ISO-NE to meet its responsibility, so that ratepayers can avoid these costs. CLF will continue working to accelerate shutdown to prevent further damage to public health and the environment and to stop Dominion and ISO-NE from forcing ratepayers to prop up this polluting dinosaur of a plant that should have been closed years ago.
Articles in this morning’s Boston Globe and Salem News describe an important shift in the status of Salem Harbor Station and highlight the need for ISO New England (ISO-NE) to go beyond the analyses it has done in the past so that it can finally identify an alternative that will actually solve the reliability issue that has dogged efforts to retire the plant since 2003. That is the subject of the recent protest filed by CLF asking the Federal Energy Regulatory Commission to require ISO-NE to perform an expedited analysis of the alternatives and establish a timeline for implementation.
ISO-NE’s failure to identify solutions that will relieve the need for Salem Harbor Station has resulted in decisions that will cost ratepayers up to $18.5 million in above market payments in 2012-2013 and up to $16.9 million in 2013-2014. ISO-NE could avoid imposing these costs on ratepayers by implementing an alternative that would allow the plant to retire by 2012.
However, if ISO-NE rejects Dominion’s recent “permanent delist bid” – its latest and most telling signal that it wants to retire the plant – on the basis of reliability, ratepayers face the risk of even higher costs. The reality is that ratepayers pay more per kilowatt for electricity from Salem Harbor Station than they pay for other sources of electricity in the capacity market ranging from natural gas to nuclear and renewable. This dispels the perception that coal is a cheap source of electricity. Importantly, these additional costs aren’t spread among ratepayers throughout New England; instead, they are passed on solely to the ratepayers in northeastern Massachusetts, the same people who already bear the costs of additional medical expenses from the heart and lung diseases and other illnesses caused by pollution from the plant. A study released by Clean Air Task Force concluded that pollution from the Salem Harbor Station causes 20 deaths, 36 heart attacks and 316 asthma attacks every year.
These costs diminish any economic benefits that the City of Salem receives from tax payments and jobs at the plant, and the likelihood that Dominion will retire in 2014 if its de-list bid is accepted makes it more important than ever that an alternative use for the site be developed to replace the facility.
Dominion’s claims that it is not planning to retire the plant contradict its own filings before the Federal Energy Regulatory Commission. Continuing a tradition of telling the story that best suits its interests depending on the audience, Dominion told the Commission in a 2009 filing that it estimated only three more years of economic viability for the plant. Dominion spokesman Dan Genest told the Salem News, “We know what it costs us to produce a megawatt of electricity at Salem Harbor Station, and the lower price at auction is not enough to cover our costs to generate electricity.” Despite its claims that it can continue to make profits in other markets, Dominion has said in its own filings that it was likely to lose money in those markets.
The bottom line is that ISO-NE has a responsibility to find an alternative to replace Salem Harbor Station that will cost less. Now that the threat of even higher costs looms, protecting ratepayers demands a solution by no later than 2014, and the public health and environmental harms caused by the operation of this 60 year old coal and oil-fired relic weighs heavily in favor of shutting down the plant as soon as possible.
In an ongoing effort to protect the environment and the public from the hazards of dirty coal-fired power plants, Conservation Law Foundation (CLF) today filed a federal suit against Dominion Energy of New England for repeatedly exceeding smokestack emissions limits at its Salem Harbor Station facility in Salem, Massachusetts. The suit holds Dominion Energy accountable for willful and ongoing violations of the federal Clean Air Act’s “opacity” requirements. The Clean Air Act sets limits on opacity – a measure of the density of smokestack emissions – to minimize the amount of soot that is released into the air. Soot, which contains harmful chemicals, metals and ash, has been linked to severe health and environmental problems.
The suit would hold Dominion responsible for paying millions of dollars in penalties retroactively for violations of the smokestack emissions limits. The violations – 317 in a five year period – are documented in Dominion’s own quarterly reports of mandatory monitoring at the Salem Harbor Station power plant.
“Abiding by the Clean Air Act is not optional,” said Shanna Cleveland, CLF staff attorney. “According to its own reports, Salem Harbor Station is in continual violation of what the law has deemed necessary to safeguard public health. This casual disregard for the law and the people impacted by Dominion’s negligence must not go on unchecked.”
Recent studies have shown that even short-term exposure to soot has been linked to higher rates of hospitalization for heart and respiratory problems. Children and the elderly are the most vulnerable, experiencing health problems ranging from decreased lung function to premature death.
Martha Dansdill, executive director of the public health advocacy group HealthLink and a co-plaintiff in the suit, said, “Salem Harbor Station must not be allowed to continue to pollute with impunity. It is clear that Dominion is not operating in the best interest of the people who live nearby and must breathe in air dirtied by this particulate-laden, toxic plume. Dominion cannot continue its lax management at Salem Harbor Station which risks our health.”
For two decades, CLF, along with residents of Salem and neighboring communities, has fought to force Dominion, and before them the prior owners of the plant, to clean up or shut down Salem Harbor Station. The plant has a long history of violations related to its coal-burning operations, repeatedly exceeding legal limits on the discharge of known pollutants including, over time, mercury, coal ash and now, soot.
The Conservation Law Foundation (www.clf.org) works to solve the most significant environmental challenges facing New England. CLF’s advocates use law, economics and science to create innovative strategies to conserve natural resources, protect public health and promote vital communities in our region. Founded, in 1966, CLF is a nonprofit, member-supported organization with offices in Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.
Here is the basic situation: Dominion has “de-listed” the Salem Harbor Power Plant in the upcoming “Forward Capacity Auction”. This means that it is virtually certain that in the 2012-2013 period that the plant will not be obligated to run and will not received capacity payments that power plants receive when they have such an obligation. While the plant could still run and be paid for the electricity it made the act of de-listing means that the owner of the plant thinks there is a significant chance it will not be running during that year. If, however, ISO-NE, finds that one (or more) of the power generating units at the plant are “needed for reliability” then Dominion would receive payments set at the level of the “de-list bids” submitted this year.
Here is the dispute: ISO-NE argued that Dominion had set the amount of its “de-list bids” to high. Dominion had calculated those bids assuming that all pollution control equipment put into the plant would have to be depreciated (basically paid off) within three years. ISO-NE argued that this was inappropriate. Local newspapers took note of this dispute.
CLF, and the Massachusetts Attorney Generals office, agreed with ISO-NE that Dominion’s bids were inappropriate. CLF, pressing beyond the polite wording of ISO-NE’s filing, argued that the only appropriate circumstance for the “super-accelerated depreciation” being sought by Dominion would be appropriate only if Dominion were proposing to permanently de-list the plant. The absurdity of Dominion’s position was highlighted by the fact that it was contradicted by public statements of its own spokesman in a local newspaper.
The Mass. AG, supported by CLF, also raised concerns about the lack of public disclosure of key information about the plant and the lack of auditing of the representations that plant owners like Dominion made to ISO-NE.
FERC, in the order resolving the dispute, accepted the basic logic that ISO-NE and CLF presented, requiring use of the longer depreciation period proposed by ISO-NE. FERC stated that it could not consider converting a de-list bid from being one-year to permanent at this point in the process – which is essentially a moot point as CLF floated that as an idea that would only apply if the shorter depreciation period was accepted, which it was not. Also, FERC did not squarely address the issues of public disclosure and auditing, relying on earlier decisions that will be continued to be criticized.
But in the end this was squarely a defeat for Dominion: their bluff of calculating costs as if the plant was shutting down, but not actually committing to do so, was called.
These battles will continue. The likely next dispute will center around “reliability” as all of these numbers games are meaningless if ISO-NE recognizes that the improved transmission system, new generation and rising amounts of energy efficiency and “demand response” (slashing energy use at peak hours during the summer) means that the plant can retire without causing any shortages in the regional electricity system. They are very close to doing so (having found that other nearby plants can safely retire) and are likely to reach the right result here – although it might take some encouragement.
